Oil-market balances are now more fragile than at the start of the Middle East conflict, and any flareup after the US midterm elections will push prices higher, according to ANZ Group Holdings Ltd.

The bank now expects Brent to end the year at $105 a barrel, up from its previous $95 projection, assuming there’s not another escalation in Middle East hostilities, strategists including Daniel Hynes and Soni Kumari said in a Friday note“The forecast does not require another geopolitical shock,” they said. “Rather, it assumes that the constraints already confronting Middle Eastern exports, shipping and refined-product markets persist through year-end.”Oil traders are bracing for a flareup in hostilities after the midterm elections on Nov. 3. Brent rallied to a six-month high above $117 a barrel on Friday on signs the US may resume military strikes against Iran.

Although flows through the Strait of Hormuz have largely recovered, the efficacy of those shipments have deteriorated to around 60% of pre-war levels, Hynes and Kumari wrote. Even without a worsening in logistics, the current tightness in deliveries, particularly in shipping, would make it difficult for the market to rebuild inventories, they said.

Meanwhile, strategic stockpiles have been drawn down, while underlying demand may be stronger than anticipated, they said. Global spare crude inventory cover is currently around 41 days, down from 45 days earlier this year.

Furthermore, any improvements in oil supply could unlock some of the demand that was previously curbed by shortages, high freight costs or trade and refining bottlenecks, they said.

“The picture is uncomfortable,” the strategists wrote. “Eight months of adapting to disrupted Middle Eastern supply have materially weakened the buffers that absorbed the initial shock.”